Wednesday, May 30, 2012

The Cost of Success

In the past week, both Disneyland Resort and Universal Orlando Resort have announced price increases for admission. These two resorts have one thing in common: success.

Disneyland Resort has nearly one million annual pass holders. This incredible number is the result of a re-dedication to quality that Disneyland Resort undertook in the early 2000's on the cusp of the resort's 50th anniversary. This movement will culminate with the June 15th grand opening of Disney California Adventure (note the lack of 's.)

Disneyland Resort has a problem, a good problem: too many people want to visit. People want to visit, and often, because Team Disney Anaheim has brought back the quality to Disneyland Park that Disney built its reputation on and they have finally made California Adventure worthy of the Disney name. Due to the expectation of unprecedented attendance at the resort this summer, cast members have been blacked-out from using their maingates, and the price of a Disneyland Resort Annual Pass has increased substantially.

Is the increase fair? Well, the market suggests so. Demand exceeds supply. One million locals cannot visit California Adventure on June 15th. If an annual passholder decides to not renew, I daresay many more will be willing to replace them. What a problem to have!

Universal Orlando Resort does not have nearly the annual passholders that Disneyland Resort has. Instead, it has a large amount of single day visitors who do not take advantage of the things that would make the resort money. Universal Orlando, like Walt Disney World Resort, covets multi-day stays. Walt Disney World has been very successful at keeping guests on property for multiple days, eating its restaurants, staying in its hotels, and shopping in its shops. Universal Orlando wants to replicate that model.

The Wizarding World of Harry Potter made Universal a player in Orlando again. Since the success of Potter, Universal Orlando has taken steps to becoming the resort it aspired to be when it added CityWalk, three resort hotels, and Islands of Adventure in 1999. Additions such as Hollywood Drive-In Mini Golf, Cinematic Spectacular, Superstar Parade, and the new Blue Man Group show are all designed with the intention of keeping guests on property. With the new offerings, guests need to stay later and longer on Universal Orlando property to get the full resort experience.

Most guests only come to Universal Orlando for a day and leave to return to their Walt Disney World resort hotel. By raising single day prices, Universal Orlando is taking advantage of demand for its product while it is popular and also enticing guests to extend their stays to take advantage of reduced ticket prices the longer they stay (again, the Disney model.) Universal may even be slowly raising prices to make a possible mandatory 2-park ticket more palatable in a few years when Potter Phase 2 is complete (but this possibility is pure conjecture on my part.)

Is a theme park worth $80-90 a day? That is your prerogative. Personally, I do not think so, but obviously, the majority disagrees. Attendance continues to increase as resorts raise prices yearly. Americans have shown they are willing to pay premiums for themed entertainment. I will say that the increases are at least more palatable when you can see the revenue at work. At Universal you can see where the money is going: Spider-Man refurb, Despicable Me Minion Mayhem, Cinematic Spectacular, Spongebob Storepants, Superstar Parade, CityWalk Promenade,Wizarding World of Harry Potter Phase 2, and whatever else the "UniBlitz" brings in the next five years. At Disneyland Resort, you can see the $1 billion+ pumped into California Adventure. These are tangible additions and changes that you can see where the money is going.

I am just glad that I have cast member friends with maingates, and Universal annual passes are affordable.